Leasing Your Commercial Space? Questions to Ask Your Landlord Before Starting Your Fitout
Leasing a commercial space involves more than just signing a contract.
Discover all-important lease terms, shopfitting, various fitouts and more as you navigate through commercial leases. You deserve to have your office or workspace designed as you require while the specialists take care of all the details.
Fitout companies, such as Ramvek, are here to make the process seamless for local and global organisations. Our experts aim to equip business owners with essential questions to ask landlords before initiating a fitout project.
Understanding Lease Terms
Commercial lease terms are bountiful, and learning them will be an asset as you plan to lease your property. Be sure to confer with your legal counsel for a more transparent and better understanding of lease terms. Business Victoria has valuable insight into understanding lease agreements when leasing a commercial or retail property.
Contract Length and Flexibility
Contract length (or lease team), defined as the time frame for which a signed lease is in effect, establishes the time frame for both the lessee and the lessor. There are three main types of lease terms: fixed, periodic, and indefinite. Under the Retail Leases Act 2003 (including any options), leases must be at least five years, though a tenant can request a shorter term.
Contract flexibility refers to flexible lease terms in rental contracts that let tenants modify the terms to suit their needs. For instance, flexibility in a lease contract might enable shorter or longer lease terms, options for renewal, or the capacity to alter a standard contract.
Allowed Modifications and Restrictions
Allowed modifications in leases are defined by one or more underlying assets that may be added or removed from the right to use them. The contractual lease term may be lengthened or shortened as part of a lease modification.
Restrictions in your lease can apply to the rent and its increases in accordance with any or all of the provisions of the lease itself, the prospectus governing the lease, a certificate, a settlement order, a consent decree, or other instrument.
Financial Considerations
The financial considerations of leasing a commercial property extend beyond just acquiring a real estate agent. There are many things to consider before leasing your property, including the cost of rent after construction fitout, use of a fitout company, commercial interior design and more.
Cost of Rent Post-Fitout
Depending on how your fitout has been developed by the Design Lab, you can have a retail, shop, office or commercial fitout. The rent may change based on the cost of designing and constructing the property’s interior fitout.
Security Deposit and Maintenance Fees
According to the Victorian Small Business Commission, the landlord is required to hold security deposit (bond) funds in an interest-bearing account, with the interest forming part of the security deposit. Stipulations around security deposits may vary depending on different states, cities and suburbs, so check with your local council.
Landlords are responsible for maintaining the same conditions throughout the tenant’s lease. These include:
- Structure of the premises
- Fixtures and fittings (including Joinery Production & Maintenance)
- Plants, audiovisual equipment and air conditioning
- Appliances provided by the landlord and relating to services such as gas, electricity and water.
Fitout Period
What is a Fitout Period?
A fitout period occurs before the lease begins. During this period, the tenant or lessee is not liable to pay rent, but the time is instead used to install the necessary equipment, commercial cabinets and more to use the property for its intended purpose. In a nutshell, it is making the property suitable for occupation.
How Long Will They Give You (Rent-Free) to Fit Out Your Space?
This depends on what is being done during the fitout. Commercial fitouts depend on three things: the current state of the property, the size and complexity of the design, and the lead times.
The landlord and tenant will agree on a fitout period, during which the tenant will not pay rent, and the design and construction can occur.
With Ramvek, the fitout is done internally (unless there are extenuating circumstances), so it cuts down on time needed to source designers, contractors, permits and more. We will give you a timeframe as we work through the steps of the fitout with you.
Regulatory Compliance and Permissions
If anything happens to change, whether through external or internal factors, certain compliances and permissions must be met and handled.
What Kind of Fitout Changes Require Approval?
Several fitout changes can require approval. These include:
- Setting up a store, food premises or other business
- Altering the existing shop front
- Attaching signage to the property
- Updating or remodelling the interior fitout of the premises
- Adding outdoor seating or heaters on the footpath.
Councils across Australia have different regulations in place for managing changes in fitouts. With a team of general contractors, Ramvek keeps abreast of these changes and can manage them on your behalf. That said, it’s always wise to get in touch with your local council to ensure that your fitout is up to code.
Are There Zoning or Building Regulations?
Yes, definitely.
Zoning and building regulations are a fundamental part of commercial property management. The Department of Environment, Land, Water and Planning has a helpful Planning Maps Online tool to help you further understand zoning and building regulations.
You can also visit the Victorian Heritage Database to see if the property you’re looking to fitout is historic, which may require extra approvals and alter your plans.
Thankfully, through Ramvek’s expertise, we will help you acquire permits, necessary consults, licences, registrations and more while adhering to your vision for your business or property.
Utilities and Infrastructure
Utilities and infrastructure refers to water, electricity, internet connection and other essential services for running and maintaining a business.
Availability of Utilities Like Water and Electricity During Fitout
You may not have your necessary utilities during the fitout period – which is what makes this period vital. According to regulations, your business may not be able to operate without fulfilling the availability of necessary utilities.
To remodel or modify parts of your interior fitout, there may be intervals during the fitout period when your utilities are briefly interrupted. It’s crucial that you don’t try to operate as usual before the fitout period is complete.
IT Infrastructure and Networking Concerns
Much like utilities, infrastructure and network connections may also be affected during the fitout period. This is normal, as it is when the business will be set up to be operational. Please allow the whole fitout period to pass before opening your doors.
Termination Scenarios
Unless the lease allows it, a tenant or landlord cannot terminate the lease early. It is a legally binding contract. However, there are obligations and rights that tenants or landlords may be entitled to when deciding to end their lease early. You can enter into a ‘surrender of lease’ if both parties agree.
What Happens to the Fitout If You Terminate the Lease Early?
Unless discussed otherwise and agreed upon by both parties, the fitout needs to be removed from the property. This is compliant with the tenant returning the property to its original condition. After this has been completed, it’s recommended that the tenant sends an email or letter to the landlord to state they have removed the fitout and restored the premises.
Penalties and Dismantling Costs
Several different types of penalties could occur if a tenant chooses to end their lease early. This includes being liable to pay the rent owed from the day they end the lease until the end of the agreed term of the lease. It could also mean paying the landlord’s costs of re-leasing, which could include advertising and other expenses to find a new tenant.
Landlords may also choose to incur dismantling costs if the tenant has not removed their fitout. All these steps are ways for the landlord to reduce their loss.
Post-Fitout Management
After your commercial fitout has been installed or dismantled, the property or the fitout may require some additional management. Ramvek enacts both preventative and on-demand requests, as we understand that your fitout is an investment.
Maintenance
Our maintenance covers all eventualities. Customised fitouts require necessary and regular upkeep to function properly and smoothly. Our passionate team includes joiners, electricians, plumbers, carpenters, painters, engineers and jacks of all trades, serving as craftspeople who maintain the functionality and beauty of your commercial fitout.
Contact Ramvek To Talk About Your Dream Fitout!
Let Ramvek guide you through the intricacies of commercial property fitouts and leasing. We specialise in aiding aspiring tenants in developing their businesses and visions alongside them. Your fitout represents your business at its very core, and our purpose is to make sure it reflects everything you represent. Contact us today to take the first steps towards building your dream fitout.
